Brexit and jams political economy slides dec 2016.pptx
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Transcript of Brexit and jams political economy slides dec 2016.pptx
Brexit and Jams8th December 2016
Structure
March 2016
November 2016
But what does it mean for the Jams?
Things to watch
March 2016 - growth forecasts
March 2016 - debt forecasts
March 2016 - inflation forecasts - rise back to 2%
What’s changed?
Hard to forecast because “the nature of the UK’s future trading relationship with the EU is unknown”
● Assumption 1. lower business investment
● Assumption 2. Higher inflation - lower household consumption
● Assumption 3: End of cyclical upswing (so reducing potential growth)
● Assumption 4: Otherwise positive effect from higher migration will vanish
● Assumption 5: Trade will reduce overall
November 2016: lower growth in next 2 years
November 2016: inflation higher over next two years
November 2016: Debt still rising….to over 90%...
Wishful thinking 2010-2016
Main policy announcements
Savers: an opportunity to lend to the government at an interest rate that looks attractive (?)Drivers: now ritual cancellation of notional planned increase in fuel dutyLow earners: slight easing of tax credit taper plus higher minimum wageMillennials: faster housebuilding and clamp down on letting feesBusinesses: reminded of planned reduction in corporation tax, new R&D investmentConstituency MPs: a myriad of road and rail infrastructure improvements.
...adding up to a slight easing in the pace of austerity
..but an easier life for the Chancellor
But what does it mean for the JAMS?
“You have the job, but you don't always have the job security. You have your own home, but you worry about paying the mortgage. You can just about manage, but you worry about the cost of living and getting your kids into a good school….The government I lead will be driven not by the interests of a privileged few, but by yours”
Theresa May, on becoming prime minister, 13th July 2016
Things to watch
Are the OBR assumptions correct? E.g. confidence, sterling.
Can if feel OK for the Jams?
And, er, the future of our trading relationship with the EU
QUESTIONS?